Dowling Sportswear is considering building a new factory to produce aluminum baseball bats.
(Related to Checkpoint 11.1) (Net present value calculation) Dowling Sportswear is considering building a new factory to produce aluminum baseball bats. This project would require an initial cash outlay of $4,000,000 and would generate annual net cash inflows of $900,000 per year for 7 years. Calculate the project's NPV using a discount rate of 5 percent.
If the discount rate is 5 percent, then the project's NPV is _______ $ . (Round to the nearest dollar.)
Homework Answers
The project's NPV is computed as shown below:
= - $ 4,000,000 + $ 900,000 / 1.051 + $ 900,000 / 1.052 + $ 900,000 / 1.053 + $ 900,000 / 1.054 + $ 900,000 / 1.055 + $ 900,000 / 1.056 + $ 900,000 / 1.057
= $ 1,207,736 Approximately
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Dowling Sportswear is considering building a new factory to produce aluminum baseball bats.
Dowling Sportswear is considering building a new factory to produce aluminum baseball bats
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